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How will the Inflation Reduction Act affect San Diegans?

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Posted at 5:12 PM, Aug 08, 2022
and last updated 2022-08-08 20:12:01-04

SAN DIEGO (KGTV) — Democrats are taking a victory lap after the Senate passed a historic bill over the weekend.

The Inflation Reduction Act is a 740 billion dollar package that makes the largest investment in clean energy in US history.

It includes new tax credits for Americans who buy electric vehicles and also aims to lower some health insurance premiums and make prescription drugs more affordable for seniors.

The House is expected to pass the bill as early as Friday and then it will go to the President's desk.

Experts in both the economy and climate field believe this plan is a solid one. On one hand, an increase to taxes will help lower our nations deficit. As far as climate goals, San Diego is already on the right track, and the funding we could be provided will only help us.

RELATED: A finance expert's prediction for summer inflation in San Diego

On Sunday, the Senate passed what is considered the largest climate investment in US history, at 370 billion dollars towards clean energy.

"We are in a very critical time where we need to invest as much as we can to reach 0 carbon emissions," shares Brenda Garcia Millan with Climate Action Campaign.

The research and policy analyst says the goal of the bill is to reduce carbon emissions by 40% by 2030. She furthers that the City of San Diego just updated it's Climate Action Plan to achieve zero carbon emissions by 2035.

How that will happen has not been decided.

"Once the City of San Diego releases an implementation plan and financial plan," explains Millan. "Then it will be in a good position to compete for the grants."

Brenda is hoping that the funds from this act could go towards helping us achieve our own goals. The City would have to compete with other areas for funds. The Inflation Reduction Act includes tax incentives to help turn more people away from gas and towards electricity.

"Globally that's a major concern that most people don't have the means to pay for renewable energy or clean energy," shares Millan. "However legislation like the IRA is aimed at making clean energy more accessible, and I think more people need to be excited about that."

The bill is also unlikely to raise taxes for most people. According to economists like Alan Gin, a professor at the University of San Diego, the ones who will feel the pinch are big businesses.

"It puts a minimum tax of 15% on any corporation making more than a billion dollars," explains Gin.

Gin says that San Diegans do not have to be worried.

"There are no direct taxes on people making lower amounts, less than 400 thousand," he shares. "People who are saying that everybody or nearly everybody in the income distribution are going to be affected, are looking at the what they would call indirect effects."

Gin says there is currently disagreement over whether there will be a trickle down effect, but he says as of now, the majority of people are leaning towards no. He says the only thing that may cause San Diegans to pay more is the increase in IRS auditors.

"If you have been doing stuff incorrectly as far as taxes are concerned, you may have to pay more," explains Gin. "But that's going to help close what's called the tax gap, that is the difference between what people actually owe and what they pay."

Now Gin says studies have shown that the tax gap mainly effects people who have a higher income.